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Nifty : 22957

Technical Outlook

Day that was… Equity benchmarks concluded a volatile session on a positive note on the Sensex weekly expiry day. The Nifty gained 128 points, or 0.56%, to settle the session at 22,957. However, market breadth remained in favor of declines with an A/D ratio of 1:2 as the broader market underperformed. Sectorally, Realty, Financial Services, and PSU Banks outperformed, while Pharma, Healthcare, and Consumer Durables lagged.

Technical Outlook:

• The Nifty opened with an initial gap up (22,829–22,960) and gradually inched upward that helped Nifty to fill Monday's gap. However, after filling the gap, the index faced selling pressure, erasing nearly 80% of intraday gains. Consequently, the daily price action formed a Doji candle, signifying indecisiveness. India VIX, closing above 18 levels, highlights the elevated volatility.

• Key point to highlight is that the Nifty has now approached the lower boundary of the support trendline (drawn connecting the August–November 2024 lows), indicating supportive efforts amid oversold conditions as the monthly stochastic reading at its lowest since 2002 at 15. In addition to that, Positive divergence on the daily RSI with bullish cross over in today’s session suggests that follow-up buying could support a potential rebound.

• Going ahead, for confirmation of a pause in downward momentum, a decisive close above Tuesday’s Doji candle is crucial that would lead to technical pullback towards 23300-23400 zone. The sustenance above 23,400 for the next couple of sessions would pave the way for a pre-budget rally. Meanwhile, on the downside, the 22,500 zone remains a key support as it aligns with the implied target of the recent consolidation breakdown (24,200–23,300) and the 50% retracement of the October 2023–September 2024 rally (18,838–26,277).

• In the process, bouts of volatility cannot be ruled out owing to US Fed meet outcome, monthly expiry week, Union Budget coupled with Q3FY25 earnings of many heavy weight companies which would have bearing on the market.

• Historically, since 2002, Nifty has not recorded negative close for more than 3 consecutive months wherein average correction has been to the tune of 14% (barring 2008 & 2020 scenario). Buying in such scenario has been fruitful as Nifty has garnered 15% returns in subsequent three months. In current scenario, with 13% correction already in place, we expect index to maintain the same rhythm as downside remains limited with key support at 22500 levels

• On the broader market front, we witnessed follow up selling in the Nifty Midcap and Small Cap indices, both indices closed below the previous two weeks low and 52-week EMA indicating extended correction. A decisive close above previous session's high would be the pre-requisite to pause the ongoing corrective move

Nifty Bank : 48867

Technical Outlook

Day that was :

The Bank Nifty settled the Tuesday’s session on a positive note on account of RBI’s announcement to boost liquidity in the market . Bank Nifty gained 1 .67 % to settle the session at 48867 . The PSU Banking index mirrored the benchmark move by gaining 1 .71 % . Market breadth remained in favor of bulls as eleven out of twelve stocks closed on a positive note .

Technical Outlook

• The Bank Nifty opened gap -up and witnessed gradual up - move breaching the previous four sessions high of 48892 . In the process the index created a high wave candle with a bullish body indicating positive bias, amid ongoing volatility .

• Going ahead, we expect the Bank Nifty to move towards the upper end of the ongoing consolidation at 49650 (47850 - 49650 ) aligned with 52 -week EMA . A breakout above this mark will accelerate the pullback, pushing it towards 51600 mark which is 61 . 8 % retracement of previous fall (53888 - 47844 )

• Structurally, over past three weeks, the index has been hovering around the long -term rising trendline (drawn adjoining subsequent lows off jun -22 ) amid oversold conditions, indicating exhaustion on the downward momentum . Additionally ,the daily price action has bounced after forming a potential double -bottom pattern and is now on a verge of breaking out of a falling trendline (joining the highs of Dec -24 and Jan -25 ) . The daily stochastic oscillator witnessed a bullish crossover, indicating continuation of the ongoing pullback

• In tandem with the benchmark index, the Nifty PSU Bank inde x bounced from the 50 % retracement mark of the recent up -move (5866 -6480), closing the session with a bullish bias . The daily RSI witnessed a bullish crossover, indicating impending pullback . Going ahead, we expect the index to move towards 6300 , which is mark of falling trendline (joining the highs of Dec -24 and Jan -25), sustaining above which will accelerate the pullback towards 6720 being 61 . 8 % retracement mark of the previous fall (7248 -5866 ) .

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